Corcoran: M&A an option if we can’t fix gaming issues

Paddy Power Betfair could resort to M&A if it is unable to fix its gaming issues in-house, the operator’s CEO Breon Corcoran has said.

The vertical continued to perform “below expectations” in Q1, with revenues up just 2%, and Corcoran admitted the company was still evaluating long-term solutions.

Corcoran had previously said that the sports-led firm lagged behind smaller gaming-specific rivals, and when asked by analysts on Wednesday if one of these could be an acquisition target, Corcoran said: “That may have occurred to us.”

The exec explained: “As we see the sequencing; we will fix the stuff we can fix and see what that does. Then we’ll think about our brands and whether they can stretch to closer to where the gaming market is – and it’s entirely possible that’s changed over the last number of years.

“If we can’t fix it organically, we will look at inorganic solutions.”

The exec suggested that a sports-led firm could only do so well on gaming through cross-sell alone, a point strengthened by similar muted growth in gaming for Ladbrokes Coral this morning.

Corcoran added: “A bunch of things are in the process of being fixed – some CRM, some user journey, some promotional stuff. We may then have to think about the broader proposition and sharpening that for gaming-only customers. We have to be better than just cross-sell.”

And M&A could indeed become necessary, with Corcoran adding: “We’re seeing green shoots but only a few. We’re not guiding that this will be fixed in the immediate future.”

Goldman Sachs estimated in March that PPB has around £400m in cash and said bolt-on M&A was “increasingly likely”.